J and matt do not appear to be correct. The original post on the bet (linked to by Bryan above) states: "3:1 odds, and I win if (according to according to ncdc.noaa.gov/cag/time-series) the average global annual land + ocean temperature increase between 2014 and 2028 inclusive is less than or equal to +.05 C." There is no "per decade" in there.

I didn't comment in time on Caplan's original bleg, but I would have suggested that Caplan ask Bauman (or any other climate expert) to make a two-sided market on global temperature rather than fixing the threshold at 0.05C and asking for odds. Bauman would have been required to quote a bid threshold and an ask threshold around where he thought the global temperature increase would be, say 0.15-0.25C for example. If Caplan wanted to bet on the increase being less than that, then Bauman would pay Caplan an amount proportional to 0.15C minus the actual change. (If the actual change turned out to be more than 0.15C, then Caplan would pay Bauman.)

That would give us a better idea of Bauman's true beliefs about where global temperatures were headed. The bid-offer spread would also tell us something about his confidence in his beliefs.

Aside: it seems to me that, before we can adopt a carbon cap-and-trade system, we would first need such a global temperature futures market, along with possibly another market for correlation between carbon emissions and global temperature, to determine where to set the cap. People that believed we needed tighter caps would have to "put their money where there mouth is" by going long on temperature and vice versa for those that thought tighter caps were unnecessary. Also, the temperature futures would allow one to hedge against negative economic consequences of either too much carbon (by going long temperature) or unnecessarily restrictive caps (by going short temperature). If only we could have shorted global temperature 15 years ago...

Given that avg(2001-2014)-avg(2000-2014) = 0.14C, Yoram is almost certain to win the bet even if the so-called "pause" continues through 2029. Did no one actually look at the NOAA data before advising Bryan on this?

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